Is renewable term life insurance a good idea?

Renewable term is great for those who need flexible or short-term coverage. If you think you're going to need 30 years of coverage, however, you may be better off buying a longer-term policy. Your rates will typically go up significantly if you renew over a long period of time. If you're looking for coverage for both you and your partner, survivorship life insurance is another option to consider. Also known as "second-to-die" life insurance, survivorship policies offer lifelong protection to both you and your partner without the need to renew. Since they only provide a payout after both spouses have died, these policies are best for couples looking to leave money behind for the next generation.

What's the difference between renewable life and convertible life?

It's easy to confuse renewable term life insurance with convertible term life insurance. Renewable term allows you to extend your current term life coverage. Convertible term gives you the option to convert your term life coverage to permanent coverage at any point during your term or before you turn 70, whichever comes first. In both cases, you don't have to reapply for insurance. With convertible term, though, you'll end up with a permanent life policy, which is more expensive but lasts for your entire lifetime. With renewable term life insurance, you'll keep your same term life policy for as long as you renew.

How much can my rates increase with renewable term?

That depends on your policy and insurance company. Your insurer will typically tell you the maximum amount your rates will increase if you renew the policy. Over time, your rates could add up to multiple times your original premium. Talk to a life insurance professional about your options and how renewable term would work for you.

Renewable Term Life Insurance

Think you’ll need more coverage in a few years? Renewable term plans make it simple to extend your policy, so you don’t have to worry about reapplying later.

What Is Renewable Term Life Insurance?

Term life insurance is a type of life insurance policy that lasts for a set period of time, usually between 10 and 30 years. If you die during that time, your family receives a cash payout they can use to replace your income, cover daily expenses, pay credit cards or debts, or use for anything else they need. At the end of the term, your coverage expires and you’ll need to buy another policy if you want to stay covered.

Renewable term life insurance is exactly what it sounds like: a plan that gives you the option to renew when the policy ends. These policies can give you the flexibility you need if you still have financial obligations when your insurance expires, like a mortgage or college tuition payments. Keep in mind that your rates will go up based on your age when you renew, though. If you think you’ll need life insurance after your policy expires, you can often lock in lower rates by buying a longer-term policy.

How Does a Renewable Term Life Policy Work?

When you buy renewable term life, you’ll pay monthly or yearly premiums, just like any other term life policy. At the end of the term, you can decide if you still need life insurance coverage. You can’t be turned down if you have renewable term, and many policies will let you keep renewing your coverage into your 80s and beyond.

Annual renewable term is the type of coverage you’re most likely to find when shopping for renewable term. These policies allow you to extend your coverage every year up to a predetermined age. If you’re looking for a longer term length, some policies will allow you to renew for multiple years at a time.

Just remember that when you renew, your life insurance rates will change based on your current age and other factors. While insurance companies usually limit how much your rates can go up, the increased cost is often much higher than your previous rate.